These comments are responses
to the statements listed below,
which were generated in regard to the Real Estate Developers
Interview of 02-28-2014.

Minnesota's
incentives not competitive with those of other states

OVERVIEW

Minnesota needs better economic
incentives to be able to compete with other states in attracting and
maintaining businesses, according to commercial real estate developers
Brandon Champeau, David Menke and Mark Nordland. They give an example
of how United Natural Foods, Inc., decided to build a large
distribution center in Prescott, Wisconsin, rather than in Lakeville,
Minnesota, a competing location. Wisconsin and Prescott were able to
offer the company over $7 million more in incentives than the
incentives offered by Minnesota and Lakeville. The developers believe
economic incentives can pay off by attracting new businesses that will
cycle money from new jobs through the community and the state economy.

Champeau, Menke and Nordland all believe
transportation is extremely important in competing with other cities
and that the Twin Cities area is making progress in developing
transit. Nordland says the area needs to complete the transit system,
but cannot neglect its degrading road system. He also believes
Minnesota must be careful not to tax itself out of competitiveness in
businesses property taxes and income taxes.

The developers say the benefit of the
large increases in land values that occur when the state invests in
public infrastructure, like a new highway interchange, generally goes
to farmers or to land speculators who own the land nearby, not to
developers, who tend not to buy land far in advance of development.
Nordland believes government can recoup part of this type of
infrastructure investment through the increased property taxes paid on
the developed land and the income taxes paid by employees working in
newly created jobs.

Average response ratings shown below
are simply the mean of all readers’ zero-to-ten responses to the ideas
proposed and should not be considered an accurate reflection of a
scientifically structured poll.

To assist the Civic Caucus in planning
upcoming interviews, readers rated these statements about the topic on
a scale of 0 (strongly disagree) to 5 (neutral) to 10 (strongly
agree):

(8.1 average response)
It would be helpful to schedule
additional interviews on this topic.

Readers rated the following points discussed
during the meeting on a scale of 0 (strongly disagree) to 5 (neutral)
to 10 (strongly agree):

3. Match other states' incentives.

(5.7 average
response) Minnesota's financial
incentives to attract business should be increased as necessary to
match incentives offered by other states.

4. Incentives pay off in the end.

(5.9 average
response) Offering competitive
financial incentives for businesses to relocate or expand here is a
reasonable use of tax dollars that pays for itself in the long run.

5. Use incentives to move firms within a
state.

(4.1
average response) It's also
beneficial to offer financial incentives to entice businesses from one
city to another in the same state.

6. Business lures trump foundational
investments.

(3.8 average response) It's more
important to provide financial incentives to attract business than to
invest more in education, transportation, sewer and water, and other
government services.

7. Don't tax property owners' windfalls.

(4.5 average
response) If new highways, highway
interchanges, transit lines and transit stations produce financial
windfalls to adjacent property owners, those owners shouldn't be
assessed for a portion of the costs of construction.

Response Distribution:

Strongly disagree

Moderately disagree

Neutral

Moderately agree

Strongly agree

Total Responses

1. Topic is of value.

0%

0%

15%

31%

54%

13

2. Further study warranted.

0%

8%

15%

23%

54%

13

3. Match other states' incentives.

7%

21%

29%

29%

14%

14

4. Incentives pay off in the end.

14%

7%

29%

29%

21%

14

5. Use incentives to move firms within a
state.

21%

21%

36%

14%

7%

14

6. Business lures trump foundational

investments.

29%

21%

21%

21%

7%

14

7. Don't tax property owners' windfalls.

7%

50%

14%

14%

14%

14

Individual Responses:

Matt Kane (5) (7.5) (0) (0) (0) (0) (2.5)

1. Topic is of value. Interesting topic
but needs balance. Subsidies and incentives for new companies come
from taxes paid by existing ones and by taxpaying residents. The job
growth rate and employment rate in Minnesota demonstrate our strength
as a regional leader when it comes to economic vitality. Targeted
subsidies and incentives may help one industry over another
(commercial real estate and warehousing, for example) but distort the
situation for others.

2. Further study warranted. Tap into
those with a broader perspective and a research base. Also, I would
much rather see a broader take on economic development. Business
attraction is one element and likely not the most important one. Let's
stop equating economic development with chasing and underwriting
relocations.

3. Match other states' incentives. Two
points. Job growth is more likely to come from business retention and
expansion. Economic development far too often focuses on chasing down
relocations, partly because these are very visible and thus
politically important. We need to stop the overemphasis on business
attraction. Second, Minnesota should play to its strengths rather than
collect dollars from existing businesses and residents to pay for
subsidies and incentives aimed at putting us on a "level playing
field" with Kentucky, Arkansas and Louisiana (states cited in the
interview recap). It is off-target to argue that Minnesota's
long-standing reluctance to attract businesses by handing them a
bucket of public money has undermined our economic strength, as
evidenced by the state's experience both in the Great Recession and
beyond it.

4. Incentives pay off in the end. At
what opportunity cost? Minnesota doesn't print this money used for
incentives and subsidies. It collects it from other tax-paying
businesses and residents, or keeps high or raises the taxes on those
businesses and residents in order to give the new businesses a reduced
rate. What could those dollars have been put to -- not only by the
public sector in terms of education and infrastructure spending but by
the businesses and residents who can have lower taxes if we aren't
taking up a tax collection to chase after relocations. In the case of
existing businesses -- the likely source of most new jobs for
Minnesota -- that's money that could go toward hiring, increased
productivity and other investments.

5. Use incentives to move firms within a
state. This is a zero-sum game. No net new jobs for the state but
public subsidies.

Ray Ayotte (7.5) (2.5) (5) (5) (2.5) (2.5)
(2.5)

John Cairns (7.5) (5) (2.5) (2.5) (0) (0)
(2.5)

1. Topic is of value. I have not seen
definitive data on whether Minnesota or Wisconsin or Iowa or
North/South Dakota is a net gainer in employment where incentives play
a role. Emerson just bought the former headquarters of ADC in Chaska.
I know the CEO well and discussed this choice. Minnesota won pretty
easily all factors considered. The facility could have been anywhere
in the Midwest and there was heavy competition from Wisconsin and
South Dakota. Shutterfly just committed to a huge investment in
Minnesota. State incentives tend to cost more than gained. Where will
the employees live? With a plant in Prescott, [will they live in]
Minnesota or Wisconsin?

2. Further study warranted. If you are
interested, I could talk with Steve Sonnenbert, the CEO of Emerson to
see if he would be willing to be interviewed. I also suggest
interviewing a Shutterfly rep and the CEO of the company who located
in Prescott. I suspect the rational for these decisions were much more
complicated than mere state incentives.

3. Match other states' incentives. See
above comments. There is inadequate data in my view to answer this
question.

Phil Kinnunen (10) (10) (10) (10) (10) (7.5)
(10)

6. Business lures trump foundational
investments. A bird in hand is better than two in the bush. The
infrastructure has to be in place or at least the proof that it can
and will be, and that it will be maintained.

7. Don't tax property owners' windfalls.
It's just wrong to tax someone because they made a good business deal
or were lucky enough to be in the right place at the right time.

Bruce A. Lundeen (7.5) (7.5) (5) (5) (5) (5)
(5)

2. Further study warranted. We need
somebody who has studied whether or not past economic incentive
packages have reached the employment objective they promised, and form
an opinion on benefit to the community—a cost/benefit analysis.

Michael Martens (10) (10) (2.5) (10) (7.5)
(5) (10)

2. Further study warranted. What is
important to one type of business is unimportant to other businesses.
Minnesota needs to be clear about what types of businesses it wants to
attract and be competitive with other states. Google, Facebook and
Microsoft are investing $ 3 billion in Iowa. Minnesota did not even
make the first cut because of its real estate and sales taxes. Transit
moves people but highways moves goods and people. If roads get too
crowded manufacturing jobs will leave and take the need for all the
doctors, accountants, and engineers. Minnesota has more Fortune 500
companies started before 1900 ( yes 2 zeros) than after 1950. Google,
Facebook, etc., are not being started in Minnesota.

3. Match other states' incentives.
Minnesota's incentives don't have to equal other state because of our
high quality of life, but they have to be close.

6. Business lures trump foundational
investments. This is complicated. All are important and none can
be ignored. Transportation, sewer and water are basic services that
must be provided. Without them, money spent on education is wasted.

7. Don't tax property owners' windfalls.
Yes, that value of property next to new transportation improvements.
State and local government get that money back in higher property
taxes. State gets money from increases in the value of commercial
property when commercial property pays the statewide business property
tax.

Carolyn Ring (10) (10) (10) (10) (2.5) (10)
(7.5)

3. Match other states' incentives.
Increased business means more in taxes and more in sales of products
and services. We're in a competitive environment and we must increase
incentives to compete.

6. Business lures trump foundational
investments. More businesses result in more jobs than result in
more taxes, so increasing business is a plus for money to invest and
education, transportation, sewer, water and other governmental
services.

Dave Broden (10) (10) (7.5) (7.5) (5) (2.5)
(2.5)

1. Topic is of value. This interview
demonstrated the importance of this segment of the Minnesota economy
to the function of the business and commerce at all levels. This is a
segment that perhaps many do not consider as they do public policy,
and the lack of understanding highlights issues that many in public
policy decision points need to expand their views.

2. Further study warranted. There
definitely is a need to expand this discussion to how these businesses
impact all parts of the government and private sector each day, how
the economy works, [how] jobs are created and [how] foundational
competitiveness is linked.

3. Match other states' incentives.
Perhaps the term "to increase financial incentives" is a bit strong; a
better expression would be to tailor the type and use of incentives to
ensure Minnesota competitiveness.

4. Incentives pay off in the end. Again
if defined and used with a value-added purpose that has measurable
metrics tied to incentives for the industry to demonstrate that they
are meeting objectives for jobs, etc., it will have [the] payoff
desired.

5. Use incentives to move firms within a
state. This is in most cases a negative, but if overall grow
results and adds value then some sort of incentive that keeps the
jobs, etc., in Minnesota can make sense. This requires some study and
innovation in how and what is applied.

6. Business lures trump foundational
investments. The investments in the foundational items of
education, transportation, etc., are the incentives and value on which
business can make decisions and opportunities evolve. The approach
must consider how these are all linked and prioritize. Putting
business second to the others is not being negative to business, but
really just the opposite.

7. Don't tax property owners' windfalls.
It is very reasonable to link some of the transportation value added
to the adjacent property owners if a direct link can be shown.

Scott Halstead (10) (10) (2.5) (5) (2.5) (0)
(0)

2. Further study warranted. Minnesota
needs a coordinated State, County and Community Business Development
plan that makes economic sense. We need to ensure we have good paying
jobs for various skills, education, [and] training, make sure there
are jobs outstate, provide roads, transit, housing, education/training
with a appropriate tax structure. We also need executives that are
going to act in the balanced best long-term interests of their
employees, stockholders, community and state.

3. Match other states' incentives. We
probably don't want all businesses in Minnesota. There needs to be an
economic and broad business analysis.

4. Incentives pay off in the end.
Sometimes.

6. Business lures trump foundational
investments. If we have the education, training, skilled
workforce, transportation, sewer, water, other government services and
appropriate tax structure, financial incentives should be of little
importance.

Don Anderson (5) (5) (7.5) (7.5) (5) (2.5)
(2.5)

6. Business lures trump foundational
investments. Government services are equally as important as
financial incentives.

4. Incentives pay off in the end. Yes
and no. Each case in different. Sometimes it benefits the large
company like Wall-mart [or] Target too much. There a few recently
vacated corporate campuses, [such as the old Northwest Air office
campus, which are still under used.

6. Business lures trump foundational
investments. Infrastructure and education are important. Until we
gain a critical mass of business and jobs, we may have to tell the
education lobby to lighten up.

David Therkelsen (na) (na) (na) (na) (na) (na)
(na)

If Wisconsin's metrics are so much better,
why is its economy doing so much worse?

James Fuller (na) (na) (na) (na) (na) (na) (na)

Yup. It will pay off. For the developers.
Wouldn't do anybody else a damn bit of good. Taxpayer-paid
"incentives" are a sucker game, but then there are an amazing number
of suckers in government. Unless they also get "incentives" from the
developers.

Tom Spitznagle (10) (10) (8) (8) (5) (5) (8)

Roger A. Wacek (na) (na) (5) (0) (0) (0) (5)

Chuck Lutz (9) (8) (9) (7) (7) (6) (3)

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